The Study On The Right To Terminate The Contract By The Breaching Party

According to the traditional theory of contract law,the right to terminate a contract can only belong to the observant party.In 2006,the Xinyu case established the rule of allowing the breaching party to terminate the contract.Then,the theoretical research on the right of the breaching party to terminate the contract appeared one after another.At the time of Civil Code compilation,the issue whether the contract compilation should stipulate the right to terminate the contract by the breaching party has aroused widespread controversy in the theoretical and practical circles,which has important research value.The dispute of the right to terminate the contract by the breaching party is mainly about whether the right exists or not and the nature of the right.For the former,there are mainly two views of "negative theory" and "limited affirmative theory";for the latter,there are three views of "application right theory","claim right theory" and "Rescission Right Theory".The view of "negative theory" that the right to terminate the contract by the breaching party violates the basic principles of the contract law,the value of efficiency and the moral requirements are not convincing.The right to terminate the contract by the breaching party has a sufficient theoretical basis.Firstly,the function of contract rescission is not punitive.The purpose of contract rescission is to solve the contract deadlock.The right to terminate the contract by the breaching party conforms to the purpose and function of the contract rescission system.Secondly the substitutability of actual performance and the sufficiency of damages determine that the right to terminate the contract by the breaching party conforms to the choice theory of the remedy for breach of contract.Finally,the hypothesis of rational person,the theory of incomplete contract and the theory of transaction cost shows that the right to terminate the contract by the defaulting party conforms to the efficiency value of the law.The right to terminate the contract by the breaching party has a sufficient judicial practice basis.The cases about the right to terminate the contract by the breaching party are increasing year by year,which are widely distributed in various regions of the country and appear in various disputes such as sales contracts and lease contracts.It is a dispute that judicial practice must face and solve.The empirical research shows that: the judgment view tends to support the right to terminate the contract by the defaulting party,with the overall support proportion reaching 64.2%;the main legal basis for the right to terminate the contract by the defaulting party is Article 110 of the Contract Law;the judgment reasons for the right to terminate the contract by the defaulting party are very rich,which can be summarized as follows: the balance ofinterests between the parties,the purpose of the contractand is frustrated,the cost of performance is excessive and the overall interests of the society.The constitutive requirements of the right to terminate the contract by the breaching party are the core issues,which are specifically divided into three aspects:objective conditions,value conditions and procedural conditions.In terms of objective conditions,the limitation of the dual elements of failure to perform and failure to achieve the purpose of the contract is too strict and repetitive;the single element of failure to achieve the purpose of the contract can cover the main disputes of the right to terminate the contract by the breaching party,which is more appropriate.In terms of judgment on the failure to achieve the purpose of the contract,it is necessary to distinguish between typical purpose and individual transaction purpose,make judgment according to the degree of breach of contract and specific elements.The defaulting party is the main body that can not achieve the purpose of the contract.In terms of value conditions,the fact that the obligee does not exercise the right of rescission does not belong to the abuse of right but may violate the principle of good faith;it would also cause contract deadlock and violate the principle of efficiency;and it would be obviously unfair to the breaching party as well as violates the principle of fairness.In terms of procedural conditions,the breaching party needs to terminate the contract through litigation or arbitration procedures.Therefore,the conditions of the right to terminate the contract by the breaching party can be summarized as follows: 1.the purpose of the contract cannot be achieved by performance;2.the fact that obligee does not exercise the right of rescission violate the principle of good faith;3.the performance of the contract is obviously unfair to the breaching party;4.the contract is deadlocked;5.the breaching party claims through litigation or arbitration.The practical disputes of the right to terminate the contract by the breaching party mainly focus on two kinds of disputes: lease contract and sales contract.The empirical study of leasing contract shows that: the main factors such as the distinction between the lessee and the lessor,the distinction between the natural person and the company have little influence on the right to terminate the contract by the defaulting party;the biggest influence factor is Article 110 of the contract law,Article 94 of the contract law and the principles of the contract law,which have little influence on it;and whether the purpose of the contract can be realized,whether it is obviously unfair and whether it affects the social and economic interests are the main substantive factors.The empirical study of sales contract shows that: the judgment view also tends to support the right to terminate the contract by the defaulting party,its support rate is higher than that of the leasing contract and the overall situation;the main legal basis is Article 110 of the contract law;It can be seen from the comparison with lease contract that the main obstacle of performance in sales contract is actually non performance while in lease contract is high cost of performance;whether the purpose of the contract can be realized,whether it is obviously unfair,and whether it affectsthe social and economic interests are also the influencing factors of the right to terminate the contract by the defaulting party in the sales contract;However,unlike leasing contracts,sales contracts involve less social and economic interests and pay more attention to the balance of interests between the parties.The legal consequences of the breaching party's right to terminate the contract include two aspects: rescission of the contract and compensation for damages.In terms of contract rescission,the legal consequences of contract rescission shall be determined by the people's court.The people's court mainly reviews whether the conditions of the right to terminate the contract by the defaulting party are completed.Under the condition that the conditions of the right are met,the people's court has no space for discretion.There are some confusion in the judicial practice when the contract is terminated.Based on the full compensation for the obligee,the time of contract termination should be the judgment time.In terms of compensation for damages,the termination of the contract does not affect the liability for breach of contract.The people's court has the obligation to explain to the obligee and should not mechanically apply the principle of “no trial without complaintand”.The calculation of compensation for damage is the premise of full compensation for damage.On the one hand,the calculation of compensation for damage should clarify the interest structure of compensation for damage,on the other hand,it should classify the calculation of compensation for damage in typical contracts.Although the Civil Code deleted the rules of the conditions for the breaching party to terminate the contract,the right to terminate the contract by the breaching party is not without explanation in the context of the Civil Code.Under the background of the Civil Code,the interpretation path of the right to terminate the contract by the breaching party includes Article 563,Article 580,Article 9 of the Civil Code and Article 48 of the “Ninth Civil Minutes”.Article 563 of the Civil Code originates from Article 94 of the Contract Law.The dispute on whether the "parties" include the defaulting party focuses on the system interpretation and legislative purpose interpretation.The judicial application shows that the parties are not limited to the defaulting party's views based on the judicial rationality.The conclusion of the system interpretation and historical interpretation of Article 563 of the Civil Code also supports the diversification of the parties' meanings.In addition to Article 563 of the Civil Code,there are still other interpretation paths to interpret the right to terminate the contract by the breaching party.First of all,according to Article 580 of the Civil Code,if the purpose of the contract cannot be realized due to the failure of performance in law or in fact,or the excessive cost of the performance,the court or the arbitration institution may terminate the contractual rights and obligations at the request of the parties,and the breaching party shall have the right to terminate the contract,that is,the right to terminate the contract.Secondly,the "green principle" stipulated in Article 9 of the Civil Code requires civil activities to save resources andprotect the environment.The core value of the right to terminate the contract by the defaulting party is to break the deadlock of the contract,make effective use of resources,avoid social wealth waste and meet the requirements of the "green principle".Finally,Article 48 of the “Ninth Civil Minutes” clearly stipulates the right to terminate the contract by the breaching party.Although the “Ninth Civil Minutes”is not a judicial interpretation and cannot be used as a basis for judgment,the “Ninth Civil Minutes” could be used as a basis for reasoning,which directly affects the result of the judgment and is an authoritative reference for the breaching party to terminate the contract.